Court: Ignorance Is No Excuse

Sep 23, 2014

A recent ruling in Brown v. Tellermate Holdings, Ltd. should serve as an excellent reminder that businesses using cloud computing (and their attorneys) are expected to understand the way cloud computing works, especially during e-discovery.

This became abundantly clear, according to a recent Bizlitnews blog posting, when the plaintiffs requested that Tellermate produce documents from the cloud-based application salesforce.com. Tellermate objected, stating that it didn’t possess or control the data maintained in the cloud database and that the data belonged to salesforce. Apparently Tellermate and its attorneys failed to check their agreement with salesforce.com, which clearly stated that Tellermate had access to the data and, in fact, retained ownership of the data.

The court not only denied Tellermate’s objection, it went on to question whether the data had been properly preserved. It turned out that when an employee separated from the company, Tellermate deactivated or reassigned the database access account. That meant the data input by the plaintiffs had remained accessible and could have been changed by the next employee who took over their account. Thus the reliability of the information that could be produced could not be guaranteed.

The message should be loud and clear: ownership of and responsibility for preservation of data stored in the cloud is the responsibility of the customer. This holds true regardless of the software application.

“Technology, like cloud-based computing, can be a valuable resource, but it is important to understand its intricacies in order to prevent misrepresentations to the court,” concluded attorney Matthew Barley in a posting on the Butler Snow LLP blog. “As the court in Tellermate noted, both the failure to produce and failure to preserve the information in salesforce.com was ‘premised on the basic inability to appreciate whose information it was and who controlled it.’”